Gas Tax or Toll? Wyoming’s roads will be paved with new taxation

Wearing a bright orange jacket and hard hat, Cody Beers swiveled to look for traffic and then stuck his boot in a hole in the pavement on U.S. Highway 287 just north of Beaver Rim.

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“A band aid on an open wound,” he said, describing efforts by the Wyoming Department of Transportation (WyDOT), where he works, to repair roads like this one. We had traveled south on the highway to Mile Marker 55, where WyDOT would begin putting on a $4.5 million band aid next year. We drove a small WyDOT vehicle so I could feel the cracks and bumps from frost heaves more intimately.

Road damage starts small and grows. It could begin with a snowplow catching an edge on a slight bulge, or a chain dragging under a low-slung pickup. It could even be WyDOT drilling into the pavement to see if there’s water under the pavement – which will freeze, swell and crack the road when temperatures drop.

A chart showing WyDOT revenue from 1998 to 2012. (Courtesy of WyDOT — click to enlarge)

Anyone who drives Wyoming’s surface transportation grid has encountered road damage like this, and WyDOT is telling legislators it needs more money – another $135 million a year – just to keep up with the deterioration, much less to build anything new. And WyDOT, backed by an array of influential supporters, wants to hardwire some of that new funding by putting a higher price on the gasoline that drives vehicles down Wyoming roads – an additional 10 cents per gallon fuel tax. Or, as we say in this tax-sensitive age, a “user fee.”

Del McOmie, the WyDOT’s chief engineer, warns that each dollar not spent today to patch and seal will turn into $4 to $8 tomorrow. In other words, don’t skip the minor maintenance, even if it costs a few million, because down the road you’ll be ripping the whole thing up and paying many times more. Go to the dentist for that filling, or you’ll have a root canal later.

And because this maintenance work must be done every year, and the legislature has a declining surplus in its General Fund to offer WyDOT and other needy outposts, the agency is seeking a more dependable source of revenue. That would be Wyoming’s fuel tax – sorry, user fee – which hasn’t been raised since 1998, despite several attempts, and is lower than any state’s but Alaska’s.

In the 2013 legislature, there’s a reasonable chance the gas tax hike will pass. And your drive to work is likely to cost a few pennies more every day.

Historically, legislators have resisted various taxes that might come directly from voters’ wallets, choosing instead to run state government mostly on bountiful severance taxes and royalties from coal and oil and gas. That’s why Wyoming has no income tax, low sales tax, and gasoline pump taxes far below any state in the Lower 48.

The situation is well illustrated in PowerPoints provided by WyDOT, and literature produced by a pro-fuel tax coalition called “Save Wyoming’s Roads”: Montana’s gas tax is 27.75 cents per gallon; Colorado’s is 22 cents; South Dakota’s is 24 cents; Wyoming’s is 14 cents. Interestingly, that tax differential doesn’t translate directly into lower pump prices – gasoline is rarely 10 cents cheaper in Wyoming than in Colorado (more about that later) – and prices can vary that much or more between Shoshoni and Torrington.

WyDOT has never been solely dependent on state fuel taxes. In fact, it gets most of its money from the federal government (which collects fuel taxes as well); it gets a capped amount of revenue from energy severance tax collections; and in recent years it has come to the legislature for additional large sums from the General Fund — $100 million annually from 2007 to 2009, slipping down to $45 million in fiscal year 2011.

And it’s not enough, WYDOT officials say.

The total road construction and maintenance budgets for the last six years have topped $350 million annually, and WyDOT director John Cox told a legislative committee in December that it will take more than that – about $428 million – just to maintain status quo road conditions, without adding any new or fancier highways. If he’s right, the agency faces an annual shortfall of about $110 million (that’s leaving out any General Fund contribution – the math is complicated). So, if you accept those numbers – and not everyone does – its a question of how you pay: year-by-year appropriations from the legislature, a bigger slice of severance tax revenue, more federal money, or a fuel tax?

More federal money is not an option, according to McOmie. In fact, the feds, who currently send back to Wyoming $1.60 for every $1 in federal fuel tax they collect here, want the state to shoulder a bigger share of the cost of Interstate 80, various national highways, and other roads within its borders. Utah, which is in the midst of a major road re-building program, pays for 85 percent of its cost, with only a 15 percent contribution from the feds. Wyoming gets 60 percent of its road money from Washington, D.C. But all things are not equal: the 60 percent of Wyoming’s road budget that comes from the feds is less in actual dollars than the 15 percent of Utah’s budget from Washington. Utah’s laying down a LOT of new asphalt.

Earmarked severance taxes for highways are another Wyoming option – a little less money into the Permanent Mineral Trust Fund, a little more blacktop. It’s a cure often proposed when some service, or needful group, comes calling in Cheyenne, and Sen. Stan Cooper (R-Kemmerer) has proposed diverting $142 million this way. His proposal did not garner much support in interim committee hearings.

There has also been talk of charging tolls on Interstate 80, the most expensive asphalt in the system, and a national artery that gets hammered by heavy out-of-state truck traffic. Federal funding for toll roads is no longer available, but Sen. Cale Case (R-Lander) is introducing legislation that would ask for a waiver. He admires the efficiency and low cost of Colorado’s E-470 toll road to the Denver International Airport, which recognizes vehicles electronically and sends you a bill in the mail.

Sen. Cale Case (R-Lander) would like to introduce a toll system to Interstate 80, exempting short drives by workers and charging fees for vehicles which tend to damage roads. (Click to enlarge)

“You can program in all sorts of specifics,” says Case. “For instance exemptions for short drives by workers from Green River to Rock Springs, or higher fees for damaging vehicles like long-haul trucks.”

But it’s the fuel tax that has found traction in interim legislative committees. “I think it can happen this time,” says Sen. John Schiffer (R-Kaycee), the outgoing chairman of the Senate Transportation, Highways and Military Affairs Committee. Though similar proposals have failed in the past, “people are starting to see their highways deteriorate. (A fuel tax) can help the whole transportation system, from the county road right outside my gate down to the interstate.”

Schiffer knows it won’t be easy; he’s been hearing from constituents who want any rise in the fuel tax delayed during tough economic times. Down along the interstate, Rep. Stan Blake (D-Green River) has heard the same thing. “I don’t like it being on the back of our citizens,” says Blake. “But I’ve been on the Transportation Committee for six years, and Transportation keeps presenting us with their latest super-duper thing.”

Among the super-duper arguments advanced by WyDOT is the fact that much of the fuel tax increase would be paid by travelers passing through – about 52 percent.

And Rep. Mike Madden (R- Buffalo) suggests that the extra tax may not show up, in full, at the pump. Madden, an economist who will chair the House Revenue Committee in 2013, points out that even with its lower fuel taxes today, Wyoming gas prices are often equal to or higher than neighboring states. No one is saying outright that there’s some profit-taking occurring along the supply chain, but the new tax would be collected at what’s called the Rack – the refinery or pipeline where truckers pick up the gas to take to stations – and some of the increase, Madden thinks, could be absorbed by links along the way to the pump.

Transportation officials, like most state agencies, don’t relish begging for funds at the legislature every year, especially with budget surpluses declining, though they did request another $50 million in their supplemental budget. Gov. Matt Mead chopped that from the budget he introduced in December, saying he preferred the fuel tax; “Good planning, reasonable costs and effective management can only be achieved through reliable, long-term funding.”

Support from the chief executive certainly helps. And there are other powerful interests lining up behind a fuel tax increase. “Save Wyoming’s Roads” lists lobbying groups from the Wyoming Stock Growers to the Association of Municipalities to the Trucking Association among its sponsors. Even the petroleum marketers – seemingly the bullseye targeted by a fuel tax – has backed it.

“It was a very tough jump for our guys, they’re very conservative,” says Mark Larsen, president of the Colorado-Wyoming Petroleum Marketers Association. “They know full well they’ll take the brunt of the abuse. But we can’t kick this can down the road anymore.”

The Wildlife Overpass near Trapper’s Point under construction. A portion of the revenue for the proposed gas tax hike would be shared among Wyoming’s cities, towns and counties for their own blacktop repair. (Courtesy of WyDOT — click to enlarge)

Quietly underwriting the campaign is the energy industry – the big coal and oil and natural gas producers – which has spent decades pushing for a more diversified tax structure, often through the Wyoming Taxpayers Association (WTA), which counts a variety of businesses and individuals among its neighbors, but gets most of its funding from energy. The WTA is the fulcrum of the “Save Wyoming’s Roads” campaign, and though director Erin Taylor sincerely invokes Adam Smith and theories of good economics and government, what energy industry backers want most is to stop paying all the bills in Wyoming through severance taxes.

Smartly, then, this time around, the campaign for a gasoline and diesel “user fee” – always trying to avoid the evil word “tax” – is broader based, with a politically canny combination of beneficiaries, as well as backers.

Opposition might be easier if all the additional fuel tax money were to go only to the Department of Transportation, which has its detractors, and is, after all, part of the ever-growing government enclave in Cheyenne. But fuel taxes will be distributed more widely, as you can see in another of WyDOT’s abundant PowerPoint slides. Cities, towns and counties will also benefit, with about one-third of the revenue going to them for their own blacktop needs. That provides the fuel tax with grassroots cred, and local government officials flex considerable lobbying muscle in Cheyenne. (A few other programs benefit in smaller drips and drabs – underground storage tank cleanup, ethanol, motorboats and snowmobiles all have some skin in the game.)

The draft bill first considered by legislative committees also included a jump in vehicle registration fees that would raise another $17.9 million. Currently, only $15 from each registration goes to WyDOT; the bulk of the fees – and it could be $600 for a new vehicle – is really a property tax, and goes to the counties.

But legislators felt even a small increase – the bill would have raised the state registration fee for an average vehicle by about $10 – is a hard sell. They separated the two; registration fees and fuel taxes will be considered in separate bills.

WyDOT is, by most accounts, efficiently run and smartly managed, and part of its success is a well-oiled public relations arm. So when they tell you what a backlog of unfixed roads we’ve got, and how much work there is to do, a skeptic should prepare for an onslaught of charts and numbers and acronyms.

Still, without great expertise, you can compare the roads I drove in California in November – potholed, narrow-shouldered, alligator-cracked – with my route home along, for example; the smooth, uncrowded U.S. Highway 189 from Interstate 80 to Kemmerer. My vehicle’s struts would testify that Wyoming seems a whole lot better off than the Sunshine State.

“Our hope is that more Wyoming citizens will ask that question,” says Rep. Amy Edmonds (R-Cheyenne), who is retiring from the legislature and works with the Wyoming Liberty Group. “How do you think the roads are?”

Edmonds’ group opposes the fuel tax hike, as part of its larger opposition to the growth of government. She acknowledges that maintaining roads is a function of government, but thinks WyDOT’s plans for roads and bridges need more scrutiny and oversight from lawmakers.

WyDOT is as organized and thorough in its arguments for a larger budget as it is in its internal management. McOmie notes that over the last four years, the agency has embarked on a “robust” inventory and asset management program, which ties into its fiscal planning. It can produce cost-benefit analyses in a virtual instant, so that they can tell you specifically how much more its going to cost if Wyoming foregoes that $4.5 million overlay job on U.S. Hwy. 287 and has to come back later to reconstruct the whole thing.

Rotary plows work to reopen US 14A in spring 2011. Weather anomalies in Wyoming have contributed to greater structural damage on roads. (Courtesy of WyDOT — click to enlarge)

The job I toured with Cody Beers, incidentally, covers about four miles of highway. An adjoining project – “Beaver Creek II,” with a $7.7 million price tag – may provide a test of those cost-benefit postponement calculations, because as the list of jobs-to-be-done piles up, it’s been pushed back to 2021. Parked on the highway shoulder, Beers held up a chart of about 50 jobs, just in his WyDOT region, half of them highlighted in yellow to indicate urgency. That pothole we stuck our foot into could be about three feet across by 2021.

McOmie points out that the cost of fixing or constructing roads has inflated much faster than price of celery in recent years. Again, the PowerPoint is revved up. In 1998 the average cost for moving dirt was $1.98 per cubic yard; now, it’s $2.74. Asphalt has gone from an average of $205 per ton to $641. Structural steel has more than doubled.

Using its sophisticated long-term planning models, WyDOT comes up with the number it gives legislators for the cost of simply maintaining the state’s transportation system as it is now: $428 million annually. If you want to expand – build new and bigger roads, say, to big new energy developments like the drilling fields near Moneta – we’ll have to write a check for $651 million a year.

There are graphs, too, showing road deterioration versus time; pavement quality declines about 40 percent over the first 20 years, and then it dives. The $1 repair you do at about 19 years will be a $4-$8 repair at about 25 years.

Then there are the complexities of federal and state funding mixes. Wyoming has 914 miles of interstate freeway, 2,042 miles of national highways, and about 4,700 miles of other roads. The federal highway dollars that come to Wyoming go, in some cases, exclusively to the interstates ($57 million), then to either the interstates or U.S. highways ($87 million), leaving only $36 million in the federal cornucopia that can be used on those 4,700 miles of state roads.

If the numbers haven’t numbed your brain, the laws themselves are complicated and changing, but the trend is toward more dollars for interstates, and less flexible dollars for states, according to McOmie. Since it takes four to five years to plan – much less build – a new road, the laws are usually written to cover four years. But Congress gets behind – you’ve probably noticed – so the most recent highway bill, passed in July 2012, called MAP-21 (it’s worth mentioning the entire name for its irony: “Moving Ahead for Progress in the 21st Century”) only covers a couple of years, and pretty much flatlines what Wyoming gets.

“The federal government now expects the state to take care of the state (road) system,” says McOmie. “They’re going to concentrate on the national highway system.”

Still, WyDOT is alert to opportunities, and did well during the years when federal “stimulus” dollars were available. You can see the 2009 spike on the revenue pie chart in their ubiquitous PowerPoints.

In addition, the Wyoming perspective on a transportation infrastructure weathered and worn and in need of repair is underlined by similar concerns nationwide. The Federal Highway System tracks declining ride quality on the country’s roads, along with volumes of traffic rising much faster than road capacity.

More frequent weather anomalies are also taking a toll. Engineers quoted in a New York Times article this summer noted that roads have been designed for local climate conditions, but with shifting weather patterns and more extreme weather events “we could have some very dramatic failures of our highway system.”

If the fuel tax idea falters, it will be because of consumer complaints like Blake is hearing, and skepticism about untethered government agencies building their own fiefdoms. Rep. Sue Wallis (R-Recluse) is drafting a bill to put the Joint Appropriations Council more in control of the “off-budget” activities of state agencies like WYDOT.

Sen. Cale Case (R-Lander) thinks legislators are overwhelmed by the size of WyDOT’s mission. “It’s truly a culture,” he says, “like the military. They want to build. Wider, flatter – they want to build.”

In a way, the agency’s success at maintaining and improving the roads – at least relative to losers like California – may be part of what sparks doubts regarding its professions of urgency about the dire condition of Wyoming’s roads. That, and its sometimes over-the-top public relations work.

WyDOT’s eight year project to widen, straighten and improve U.S. Highway 26/287 over Togwotee Pass included producing two CD’s of music and storytelling related to the “Togwotee Trail,” which were given out to car travelers forced to wait during construction. The agency sponsors sports teams. It puts up billboards. When I fumbled for something to write with on our road trip, Cody Beers handed me a pen labeled “Go Pokes” and “Buckle Up.”

The agency has five regional public relations representatives, one of whom is Beers, and he’s unapologetic about the investment, pointing out the educational mission of the agency that keeps him “on the ground working with the public every day.”

A sign off of U.S. Highway 287. Skeptics of WyDOT’s request point to the department’s large public relations agency as evidence of excessive spending. (Billy Hathorn — click to enlarge)

There are public meetings to gauge expectation. There are outreach efforts to educate people about winter driving, about seat belts, about drinking and driving. You can target those messages at athletic events and county fairs. “People don’t want government in their lives,” says Beers, “but when there’s a snowstorm, or a dead deer on the road, we’re supposed to be out there.”

As for the Togwotee CD, it was part of a broader marketing effort, spurred by then-Gov. Dave Freudenthal, to help communities like Dubois, which feared the long construction project on Togwotee would stifle tourism. The “Togwotee Trail” campaign won national awards, and according to McOmie, “People actually drove up there to see that project going on, from around the country, so it became a tourist attraction.” It was also a boon to a few musician friends of mine.

In fact, WyDOT has a lot more on its plate than just chip and seal projects. Wider shoulders and rumble strips prevent accidents, but so do variable mileage signs on the interstate near Elk Mountain. The agency has built wildlife overpasses – the one north of Pinedale, at Trappers Point, enables antelope to cross over busy U.S. Highway 191, which had become a death trap for wildlife with the arrival of energy workers and trucks serving the Jonah Field and Pinedale Anticline developments.

“People look at that only as a roadway project, but it’s not,” says McOmie. “You assign a value to the wildlife, you assign a value to damage to vehicles, again we have a history of that, we know what that costs, and fatalities.

“We looked at the project, at $9 million in our cost-benefit analysis; we can pay that off in well under 20 years.”

The bill to raise fuel taxes moved forward in the interim Joint Revenue Committee unanimously this fall. The bill to raise the state fee for registering vehicles cleared the committee by only one vote. The Joint Transportation Committee discussed the bills, too, but didn’t take a vote. With constituents grumbling, they were happy to leave that to the Revenue Committee. “We all know who’s driving this gas-guzzling rig,” joked Sen. Schiffer, “and it’s not us.”

The problem is, even if the legislature approves additional “user fees” on fuel, WyDOT will not have enough gas in its tank to do even the “maintenance” road upkeep that it says requires $428 million annually. Which means additional funding will have to come from somewhere, or roads will degrade further, according to WyDOT projections. And, according to WyDOT, the costs will be higher down the road.

“It’s fair to say that this won’t be enough money to do more,” said Schiffer in a phone interview. “But if you’re moving in the right direction in this business of legislation, you’re doing okay.”

— Geoffrey O’Gara is a longtime Wyoming journalist. He was a Wyoming Public Television producer and host of the influential Capitol Outlook and Wyoming Chronicle programs. He is the author of What You See in Clear Water: Indians, Whites, and a Battle Over Water in the American West (2002) and A Long Road Home, Journeys Through America’s Present in Search of America’s Past (1989) and several other books. O’Gara served on the Fremont County District One school board for eight years. An avid cyclist, basketballer and fly fisherman, he lives in Lander.